Posted
by
Soulskillon Saturday April 28, 2012 @08:18PM
from the floats-like-a-butterfly-stings-like-duty-free dept.

An anonymous reader writes "An article at the NY Times explains the how the most profitable tech company in the world becomes even more profitable by finding ways to avoid or minimize taxes. Quoting: 'Apple's headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company's profits, Apple sidesteps state income taxes on some of those gains. California's corporate tax rate is 8.84 percent. Nevada's? Zero. ... As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world. ... Without such tactics, Apple's federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study (PDF) by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent."

Personally though I don't think corps should be taxed at all. It gives them too much ammo to say things like 'taxation without representation' etc.

If we didn't tax corps then I think it would be easier to ban political speech by corporations.

The income to individuals from corps would then be taxable as ordinary income and we wouldn't have the whining about dividends being taxed twice, or the baloney about US taxes on corporations being high.

We also wouldn't have the baloney regarding local jurisdictions competing for corps based on tax give backs.

You mean, outside of the profit they earn on our labors? That not enough incentive anymore, now the taxpayers have to kick in a little extra, too?

God, what I would give to have a government with the sack to tell these extortionist fucks to go pound sand. Think Apple is going to risk the boycotts and bullshit if they fired all their employees? I doubt it very fucking much...

Steve Jobs benefited from all the things taxpayers fund growing up, just like all of us did. He wasn't raised by wolves in the fucking forest, he grew up in California, the nanny state to end all nanny states, and all those things these assholes bitch about today played a part in making him who he was, as successful as he was. Now that the company is successful, what, they have no moral obligation to pay it fucking forward?

I mean, that's what all this shit comes down to. These guys stood on the shoulders of who knows how many giants before them, giants that were subsidized by the tax dollars of the people of this country, and now that it's their turn to give a little back, they want to cry and complain about how unfair that idea is and do everything they can to hide their profits. It's no different than knowingly hiring illegals in this fucking country. People that do that shit, and play these fucking games where they only get paid a dollar on fucking paper so they don't have to pay taxes...they're doing more harm to our country than ANY fucking terrorist or gang member or welfare queen, and we all know this, so why the fuck are we playing this game?

I wanted to mod you up, I enjoyed your passion, but I so want you to look at your reasoing.I am not defending Apple, it is about time you all noticed that Apple is given a pass by the media for using the legal loopholes that other companise are villified for.--Where do you git off blamming Apple or any other corporation for the disgusting acts of congress and the senate?Those insane loopholes were mostly created years ago and are constantly polished by your elected officials to continually encourage donations to those self same public officials.--You want to blame the person responsible?Look in the mirror, then start voting like the future matters.

Oh, believe me, I know that Congress and the Senate voted for these fucking loopholes, but that's not a valid excuse for this crap. You don't think that Steve Jobs knew that he was paying an effective tax rate well below the entry-level guys he had working 70 hour weeks? This is a guy that parked in handicapped spaces looooooong before he actually got sick we're talking about here. [edibleapple.com] He rationalized it as "Horray for me, fuck everyone else", and that's a trait you see a lot among these 'Master of the Universe' types. People all over the world metaphorically polish his knob every time the subject of Apple comes up, but rarely do people talk about what an unbelievable prick he was [politicsnotasusual.com], and I don't just mean the way he treated his employees, he treated everyone that way.

Yes, congress passed laws allowing these companies to do this shit. Congress didn't make them move their "offices" to tax havens all over the world. They didn't make them send all that money to banks in the Caribbean to hide it from the IRS. Nobody forced them to be leeches, sucking in subsidies while raking in billions. Apple's sucking up $30 million in Texan taxpayer dollars [theatlanticwire.com] despite the fact that they are literally the most valuable corporation in the fucking world [macstories.net]. They've got $10 Billion (with a b) in cash in the bank, and they still need Texans to cough up a little extra to build that fucking plant? Come the hell on. That's the extortion bullshit I'm talking about. They're taking $30 million from who knows how many social programs, schools, infrastructure...and in exchange we get what? The privilege of working for them so they can earn more money off of our labors?

I mean, an unemployed mother looking for food stamps, she's a fucking leech on society, but the most valuable corporation on earth gleefully taking huge transfers of wealth from public coffers into their private accounts is what? A goddamn pillar of the community? A company to admire? Please. They're the real leeches. Let these mother fuckers move their corporate offices to fucking China, or better yet, let them take their shit and go to Africa, far from these pesky taxes and everything else. I don't really much give a shit, but I'll be damned if I'm going to sit here and subsidize their goddamn profit margin while half the houses in my neighborhood are sitting fucking vacant because the families that lived in them lost their jobs and then lost their homes, and then, when they hit the lowest point and have to go get some sort of assistance to make sure their kids eat decent food, get called "parasites". Fuck that shit. You want to see the real parasites, go fucking read Forbes.

GP's point is that they're not just benefiting from the programs, but taking taxpayer dollars to build a plant. Those taxpayer dollars could be going to fund some of the programs, but instead are diverted to Apple's expansion - even though they have billions in cash that they "don't know what to do with".

Vote? Even if there were real, viable choices, have to do more than vote. The Democrats are only slightly better than the Republicans. Democrats are merely corrupt. Republicans are corrupt and crazy. Don't think voting is enough to excuse you from being reflected in that mirror. Politicians can't afford to be honest if we won't back honest players.

I see people still banking at Bank of America, Chase, Wells Fargo, and Citi. Still buying from Apple, Microsoft, MAFIAA members, GE, BP, AT&T, Comcast. Still gambling that health insurance won't deny and drop us the minute we need it. We could destroy these companies astonishingly fast if we'd all just quit doing business with them. They wouldn't be so stupid as to push it that far. In mere days, they'd crawl on their bellies begging us for forgiveness, and they would quickly do all those things that they claim are so difficult to do, such as paying taxes, resisting the temptation to buy legislation, reducing executive compensation, treating customers fairly, and making up for mistakes. They do appalling things, and people shrug it off, or bend over and take it.

I'm in a little battle with a local city. They're operating one of those red light cameras programs. Naturally, they have rigged things to cause lucrative violations, rather than reduce them. They carefully chose intersections for which the yellow was already too short so they could truthfully claim they didn't shorten any yellows. How can I make them wish they hadn't done it? I went to a hearing with evidence that their yellow lights were too short, but no joy. Judge told me I could take up the matter at a later date in municipal court, as if going to a hearing scheduled at their pleasure wasn't already enough of an imposition on me. I declined. Now I don't shop in that city anymore. How many people have joined me in this boycott? Zero of course. I've tried to persuade others, but all that does is get them thinking I'm crazy for making such a big deal out of a petty traffic violation. A few concede that I've got a point, but still won't do anything. I should pay up, shut up and stop annoying others with my whining, and get on with life. Then some turn around and mutter about their cell phone contracts, or the cost of cable TV. Even the ones who also have been burned by these red light cameras still won't fight. Some even rationalize it, convincing themselves the system is fair.

An effective approach to clean up bad neighborhoods is a zero tolerance enforcement and clean up operation. Litter, graffiti, broken windows, and burned out lights no matter how trivial are all cleaned up and repaired as fast as possible. Serves notice that petty crime is not going be overlooked. The same would work against these corporations and governments. Don't let a red light camera ticket go because it's only a little money, and too much trouble to fight. We blow off even the most insane EULAs because we feel pretty good that most of the nonsense in there can not be enforced. We should instead make software companies clean that crap up. No EULA at all. At least we fight back against DRM.

I only partially agree with this. Starving big corps was possible few years ago. Then 2008 meltdown came and it became apparent that if they won't get money from you voluntarily paying for some goods/services, they'll get it anyway from you taxes (eg. bailouts), lucrative taxpayer-funded contracts (army) or by forcing bills for phony services down your throat (eg. Obama's healthcare 'reform').

Add ever-rising intimidation of citizens to this (TSA, so called "war on terror", militarization and brutalization of police forces, ever-rising incarcerated population), add dual-standard when it comes to law enforcement (Corzine/MF Global fiasco etc.) and what you get at the end is corporate fascist state. So much for freedoms and constitution.

If those corporate fucks won't get what they want from you voluntarily, they'll get it by other means. I'm not sure there is a good way to get out of this trap - peaceful civil disobedience is propably the only thing left.

I don't know that I disagree with anything that you said. But I think you missed the point of what I was saying.

Apple et al are companies that are about profit and making money. One of the side effects of these companies setting up shop in a town is there is some level of job creation and economic benefit. It is all about supply and demand, really. My main point was that taking away the possibility of tax incentives will not solve this problem because if competition is large enough and regions see it as

Taxing corporations is important for two reasons. The first obvious reason is that it raises revenue for the state. The second is that if you tax corporate income, then it is in the corporation's best interest to minimize income - i.e. to not pile up wads of cash as Apple is currently doing. It's not money per se, but the velocity of money, that moves the economy. Fat cats getting fatter is bad economics - unless you're the fat cat or one of their apologists of course.

If we didn't tax corps then I think it would be easier to ban political speech by corporations.

Let me explain why that isn't a good idea. Corporations are given rights under the law, not as entities themselves, but as an extension of the collective rights of the individuals that it is composed of. A corporation is formed by a group of individuals agreeing to pool resources to achieve a goal. So let's take a look at how that can play out.

You have a right to say "Screw the Government." So does your best friend. If you pool resources to say it (e.g. you make a sign, he drives you to city hall), you both still have that right. If you agree formally to do the same, you still have the same rights. 1,000,000 people signing an agreement that they have joined the "Screw Government Organization" to send 1,000 of them to DC to protest doesn't diminish the right. Forming a group to sell "Screw Government" bumper stickers doesn't reduce the group's rights to less than that of any individual. Forming a group that sells indy band bumpers stickers, and the occasional political bumper sticker, doesn't diminish the collective rights. Calling the group a corporation doesn't change things either. The name, size, profit motivation, etc do not change anything.

An so on. The basic rule is the rights of individuals can be exercised collectively. One name for this phenomena is "Corporations are people." Not a person. Though for simplicity, it's treated like a person. Because the rights of a person and the rights of a group are the same. For example, a person can own property and so can a group.

Ok, there are some exceptions. For instance, while a person can hold office, a group cannot. Same with a vote. Some rights do not scale and can't be collective. But most can.

So now look at your suggestion. How much can you restrict the rights of a collection of people without restricting the rights of individuals? Pretty difficult. Not something to be done lightly.

The problem is that a corporation, unlike a massive grassroots protest, is largely controlled by the wealthy, and will be used in most instances to further the goals of those at the top, rather than the group as a whole. This give the impression that a company's entire workforce (10,000 people) is pushing for something, when in reality it's the C-level executives and the board (30 people) who are the ones benefiting from it. There are sure to be instances where what the 30 are pushing for is a boon to the entire company, but there's also the likelihood that a significant portion of stances taken "as a corporation" will be done in the advancement of only the 30.

The individuals would naturally retain their natural rights, but only at the individual level.

That might lead to effective rights though. For example, the right to due process before forfeiting property because (and only because) the owners of the company ultimately own the property and they have that right.

On the other hand, a corporation would not enjoy other effective rights because of the way it shields the owners from prsonal liability.

Prior to the invention of corporations people like Andrew Carnegie and JP Morgan formed limited partnerships (US Steel) and trusts (Standard Oil) to do business.

The right to freely associate has nothing to do with the formation of modern corporations. It is a 20th century legal fiction created by the states looking to gain fees associated with the charter process.

The current 'personhood' rights of corporations is due to the current Supreme Court interpretation of the word 'person' in the 14th amendment. It

It has also been a long time since the board (which is supposed to represent the shareholders) has worked properly. Boards are just a bunch of mutual entanglements that pay the members green fees for the most part. I'll get the CEO of our biggest partner to site on our board. Wow and you'll be sure to get an objective opinion of what business the company should pursue too right?

Next up: the vast majority of shareholder votes are not being used by the shareholders they are the institutional investors (mutual

These are corporate profits. Whoever actually owns the company still gets taxed on any of the value that they sell or get dividends on. So apple's rate may be 9.8%, but most people who get the remaining 90% still pay more taxes. Just not usually in the same year.

Apple hasn't paid dividends on any of their massive profits so far (though that is changing in the future). Even when they will, it will be a TINY fraction of their net income.

And capital gains taxes on investments has little to do with the profit of a company. Plenty of companies don't make a profit and their stock still goes up (since stock price reflects expected value, not current value). And you can make money selling a stock short when it goes down, which has even less to do with the company's pro

Yes, and since everyone is bitching about paying taxes here, there are plenty of people that have a problem with executives tax dodging because they have $1 salaries but multimilliondollar stock compensation packages. These are the same people that do the same thing with corporate earnings to drive their stock value higher.

Speaking of bitching about paying taxes, I don't understand the mantra of "higher taxes means people won't invest in job creation" etc... Lets say you're a billionaire and pay 15% tax on your investments that earn you $50M/year. If the tax rate gets raised to 30% does that mean you're going to pull out of all your investments to avoid that extra 15% of taxes...and lose out on the frikkin 70% you still would have made!?!? Bullshit. I guess there is always the "they'll just take their money off shore crap.

The essence of the argument is that if millionaires had more money to spare they would use it to employ people regardless of the ROI for that employment. That if a corporation encounters another 50 grand extra cash it will hire someone with it. Never mind that money spent on starting up a new idea can already be deducted from your taxes and that Reagan dropping the highest tax rate from 70% to 35% didn't lead to any dramatic job creation. There's an argument to be made that certain activities which are currently not viable because they don't generate enough revenue to be worthwhile might cross the border into viability with a lower tax rate, but the number of those activities would be vanishingly small and would still have fairly crappy returns and high risk.

It's essentially an argument which ignores supply and demand. So called "job creators" act on the supply side of the equation, they produce goods or services which are consumed by others. As anyone with even basic economic knowledge knows, expanding supply without commensurate demand drives down prices. Now we can presume commensurate demand does not exist because if it did tax rates wouldn't be stopping companies from meeting that demand, so we can also assume that no one is going to increase supply regardless of how much money they might have.

There are a couple relatively obvious ways the federal government can create jobs in the private sector. The simplest is income redistribution, give money to poor people and they spend it increasing demand and creating Jobs(though not necessarily American jobs). In the US we don't like this because it's the wrong kind of socialism. It's perfectly ok to provide a moral hazard by socializing risk and privatizing gain if you're talking about rich people, but doing the same for the poor is unacceptable.

Another involves increasing workers rights by essentially eliminating "at will" employment. This doesn't as such directly increase demand, but it would make it easier for employees to say no to doing the work of multiple people, which would mean that the false efficiencies companies are currently enjoying would disappear. This is partly unpopular for all of the above reasons, but also because while there would be a net job gain, there would probably be job losses in some sectors.

Many other ways exist which would serve the same purpose, but they'd all be rejected in the current American political climate because in the US the wealthy have sold a bill of goods to the population convincing them either that they will one day be rich enough to be affected by the buffet rule and so should vote against it or that, and I honestly have no idea how this works, private enterprise would take care of them much better than the government does, how this meshes with the accusation that the US has become an oligarchy or the entirety of American history I do not understand. Libertarians seem to believe that the US has become a corporate dictatorship so as a solution they want to remove the middle man and go straight to a corporate dictatorship. Mind you, we are talking about the same voting population who 4 years after Wall Street caused the biggest global economic melt down in close to a century through pure greed and stupidity is objecting to the implementation of any kind of regulation of the baking and finance sector. The GFC should have thoroughly discredited neoconservatism since the ideology proved to be wrong in every respect, but 4 years later we're still having the same arguments.

You absolutely do not need to sell stocks. You can simply borrow against their value for your expenses. The only thing you end up paying is interest on what is basically revolving credit. That interest rate will be much lower than paying yearly taxes on the same amount.

You're ignoring the entire lifecycle. There is no free lunch (as those who borrowed against their homes based on inflated real estate valuations discovered).

Eventually you owe the money you borrowed even if you got a good interest rate because you provided good collateral.

If you had cash laying around when you originally borrowed the money, likely you would have used that instead of borrowing money. Obviously, though, if you can get, on a post tax basis, a better risk adjusted ROI on that cash than the interest rate on your loan, you should invest that cash instead -- in which case, it's not "cash" anymore available to repay the loan.

When it comes time to pay your loan, you therefore need to liquidate some assets to make the repayment - then, if you made any gains, you owe taxes. If you lost money, you would have been better off selling that asset earlier and generated some cash so you didn't need to borrow (as much) money in the first place.

If the stock you used as collateral goes down enough, you may need to repay the loans immediately - indeed, in some circumstances, the entity who made the loan has the right to sell the collateral to recoup what you owe if you don't come up with additional collateral on demand.That sale of course will, if the collateral has appreciated since you bought it, result in taxation.

The "dodge" you describe is really just leverage -- which can backfire.

You borrow money from a made up corporation and you buy their stock, by the time their stock goes down by the amount you borrowed, your loan will be deleted from the books, ensuring the corp. operates at a loss and so their stock goes down. You use the stock loss to offset your other stock gains. Now you've got free money, tax free.

I live in a country where corporations have market in operational loss to distribute profit/loss among themselves to avoid paying taxes. There is no accounting trick in the book or not in the book that would surprise me.

You typically own capital gains tax on your gain in the collateral that was forfeited - just as if you sold the collateral and used the proceeds to pay off the loan. See, for example, this [stacyscrea...ancing.net] (specifically, the section entitled 6. Question: “What happens if I default on the loan?” or “What are the tax consequences?”) for what happens in one case of such loans.

If you really believe things work the way you describe, I suggest you check with qualified tax advisers before acting on those beliefs.

Buying on margin - the commonest form of borrowing on stocks - does not result in a forced sale unless the stock price falls ("margin call"). In that case you lose money, usually almost all of it. There is no capital gains tax on a loss, only the trivially small SEC transaction fee.

Borrowing money from a third party to buy stocks, or using stocks as collateral for a loan from a third party, is unwise financially and legally questionable.

You can take a loan against the value of your stock. This is not income, and is not taxable.

In many cases, the interest paid on that loan is tax deductible. If structured correctly you may never even make a payment, the interest is simply added to the principle (it is still tax deductible). When the time comes you sign over the stock (not selling it, mind you!) to the lender, having exchanged the stock for real property and taking years of tax deductions on the supposed interest -still without paying any taxes.

Its shady, but not illegal. Loopholes exist for the rich to take advantage of.

Loopholes exist for everyone, including the guy you replied to. People smart enough to use them become rich. People that are not smart enough whine about it.

Most of the loopholes require a lot of money or assets.

It's kind of hard to live off of cash you borrowed against your stock holdings if your stock holdings are worth less than your living expenses.

And moving your money to an off-shore tax haven only makes sense if your tax savings would be larger than the accountant's fees you'd have to pay to do so, plus the amount of the risk of any changes in the tax code here or there.

You go to school? Ride public transportation? Use public anything? Get Federal taxes back in addition of what you paid? You are using the "loop holes" too That stuff is in magically pulled out of the air, it costs alot of money.

You go to school? Ride public transportation? Use public anything? Get Federal taxes back in addition of what you paid? You are using the "loop holes" too That stuff is in magically pulled out of the air, it costs alot of money.

None of those are "loopholes". Public funding of education is not a fucking loophole, unless maybe you're a libertarian.

A loophole is the kind of thing this article is about, artificial arrangements to circumvent obligations. Not straight forward government funding for the public good.

In my opinion, the US needs to be broken up into the individual states, and the federal government disbanded (so the state becomes the country, and what's currently the country disappears completely.) Perhaps two or three states might band together to form a larger country, but the US as a whole is too big; it encourages cronyism and corruption.

You can walk into a bank and borrow $1,000,000,000 against the stock, but a loan isn't "income". You then use that money at a grocery store. 50 years later, when you are dead, your estate covers the loan with stock that is sold, and nobody pays tax on it.

Why should anyone have to pay more tax than they're required to by law?

Corporations have more loopholes than natural people to reduce the amount of tax that they pay, but even normal people have a number of ways that they can minimise the amount of tax that they're required to pay. If these methods are perfectly legal, then why would you not avail yourself of them?

Would you voluntarily pay more tax than you are legally obliged to?

Furthermore, I can absolutely guarantee you that Apple are not the only company doing this, they're just the flavour of the month and they generate page views around here. s/Apple/Microsoft/g, s/Apple/IBM/g or s/Apple/Google/g or pretty well any other large company at all and the story will read the same.

Why should anyone have to pay more tax than they're required to by law?

Tax avoidance is different from maximising your tax entitlements under law. This is clearly avoidance.

Corporations have more loopholes than natural people to reduce the amount of tax that they pay, but even normal people have a number of ways that they can minimise the amount of tax that they're required to pay. If these methods are perfectly legal, then why would you not avail yourself of them?

Minimising your tax obligation according to your entitlements is legal and expected. Tax avoidance by setting up tiny offices in places with favourable tax laws to collect revenue is a deliberate construct made to avoid paying tax to the community, not a loophole.

Would you voluntarily pay more tax than you are legally obliged to?

The key word here is "obliged". I meet my obligation under law. If a company want to operate with all the benefits my state provides then why is i

It's not a straw man. You're of the opinion that it's immoral to avoid taxation, even when it's entirely legal, suggesting that your "fair share" is every tax that could possibly be applied to you if you volunteered to do so.

He's saying that's crap, and I have to agree. As far as I'm concerned, the tax liabilities you subject yourself to is largely an ammoral subject, as long as you're working within the law.

If you don't like the tax code, deal with that. There's no reason to be angry at individuals and companies doing what they legally can to avoid taxation above and beyond what they're required to pay. You're only owed what tax law says you're owed, and they're abiding by it.

When the tax code is subject to the very same corporate pressure, influence, bribery that all other law in this land is subject to, the question arises what is fair vs what it legal. When Wallmart uses billions of your/my tax dollars to subsidize the benefits for their working impoverished, they are robbing society (i.e. you and me.) As the parent says, when corporations don't pay for their use and support of the nations infrastructure, they rob society and shirk their responsibility as stakeholders in the

When it comes to Wallmart "robbing" society, exactly how much should they pay their "working Impoverished" aka people who only qualify for unskilled labor? $100,000 a year? Would that be fair? Are you willing to pay the kid who mows your lawn $100 for an 30 minutes worth of work? Of course you wouldn't.

It is immoral to avoid taxation if you bribe congressmen to get those loopholes created. Do you think these are all just oversights? Big corporations routinely purchase carefully thought out changes in the wording of laws to create loopholes for themselves. They're robbing us blind -- the bought-off congressmen blow a hole in the side of the bank, the corporations waltz in and take what they want, and then they give the politicians their cut.

If I don't like the tax code, deal with it? Fuck that. I don't have the billions of dollars necessary to purchase a law. So I'll do what I can... vote for pols who actually understand that government shouldn't be killed off, and condemn all the corporate thieves who have been robbing us blind for decades.

In terms of taxes, "tax avoidance" is figuring out legal ways to pay less tax. "Tax evasion" is doing so in illegal ways. The terms become less clear when you look at things like using your power and influence to change the laws to make something that used to be evasion mere avoidance.

If you want, you can waive your mortgage interest deduction or pay your full tax rate on your capital gains. But why would you do that when you don't have to and no one else is?

It's absolutely morally OK to do anything in your legal power to minimize your taxes. Just as it should be a moral imperative for lawmakers to stop caving to the corporate lobbyists and FIX those loopholes. If it's legal, it's not cheating (which should be self evident from the word CHEATING). So change the rules!

There's no such a thing as "fair share." Your fair share is whatever the tax law says it is.

Apple employs thousands of people. Those people pay taxes on their paycheck, and Apple pays payroll taxes on those individuals. Apple pays property taxes. It collects and pays sales taxes. It generates revenue for the music industry, which pays taxes. It generates revenue for the movie industry, which pays taxes. It pays rent to hundreds of shopping centers where the Apple stores are located; they all pay taxes. It pays advertising agencies, who pay taxes. It pays for medical benefits for its employees, and those doctors pay taxes. Its cafeterias purchase millions of dollars worth of food every year. And, what's more, Apple makes products which make the lives of tens of millions of people better.

Here's what happens when you try to start imposing some sort of "You're an American Company; pay American taxes" argument: Apple re-incorporates off-shore; its US operations are shunted to a US subsidiary, who works under contract with the main off-shore company. In the end, it pays a lot less tax, but is now a Cayman Islands company.

Here's what happens when you try to start imposing some sort of "You're an American Company; pay American taxes" argument: Apple re-incorporates off-shore; its US operations are shunted to a US subsidiary, who works under contract with the main off-shore company. In the end, it pays a lot less tax, but is now a Cayman Islands company.

The old "if we don't pay what we want we will leave" argument. If they are not prepared to pay the appropriate taxes for the privilege of doing business in your country then why let them? This goes for Micro$oft and General Electric too!
Large corporations employ less people than small businesses (a small business is less than 500 people) and yet it is small businesses that bear the brunt of taxation while large corporates get the tax breaks, the ear of the government and multi-million-dollar CEO's

As an individual, when I buy things, I directly fund companies, therefore keeping them and their employees in business. I also pay sales tax on these good, and payroll tax is just as much a tax on me as it is on my employer, since it affects a contract between us. I generate revenue for my employer, who pays taxes. I generate revenue for retailers of my employer's products and other businesses that work with my employer, who both also pay tax. I rent a home which provides an income for my homeowner, who in turn purchases goods and pays tax. I pay insurance for medical care (part of my contract with my employer), which funds an industry that pays tax. By having children and keeping in touch with my family and friends, I provide not only for the future of the country, I also directly improve their quality of life.

I hope this is a good argument to stop paying income tax. If not, I'll just move to another country. I'll pay a lot less tax, but it'll be in the Cayman Islands.

On a more serious note, Apple benefits from infrastructure and regulation provided by the federal and state governments, be they in education, in transport, in public safety, in healthcare, in environmental protection or pretty much anything else that these governments are involved in. If Apple could move their research, their product design, their product development, and as much back-office work as they can to China, they'd do it in a heartbeat. The problem is that's not possible. Apple wants the best engineers, the best designers, the best R&D teams... And those kind of people don't just want a big paycheck, they also want to live in a nice environment, where they are provided with sufficient opportunities for their spouses and children's development, where they won't fear for their life, where transport if sufficiently easy and reliable, and so forth. Apple want to become a Cayman Islands company? They'll still keep their corporate operations in the USA, because they know it's too hard to even attempt to move a dozen thousand of the best paid engineers and designers and their families off-shore.

Apple want the benefits from the infrastructure and the regulation that the USA provides, but doesn't want to fund the cost of maintaining and improving them. That's a free rider problem, and being a knowing free rider, that's hating the driver.

Certainly its logical to minimize your tax liability. But its interesting to me that Apple only paid 9.8 percent. We individuals pat at least twice that, and closer to 30%. The country is by and for corporations, I can't see that there's much one can argue against that. The constitution is dead, a more current one should probably read like a EULA.

But you as an individual most likely aren't taxed by multiple countries. Say a company operates in 4 countries. Now image if every country claimed 30% on the total net profit. That would make the company owe 120% in taxes. That's obviously absurd and unsustainable so you need to only tax on the income earned in that country. So 9.8% is a meaningless comparison to your 30% tax rate since the 9.8% is averaged all over the world. You need to compare your tax rate to the tax rate Apple pays in the United States. After all most of Apple's growth isn't in the United States it coming from China.

Strawman, strawman, burning bright...

I as an individual earn 'revenue' in one place because I only 'do business' in one place. Multinationals earn revenue in multiple places. The profits on that revenue are taxed in those places as a percentage of the revenue. If you have revenue of 20% in Great Britain, for instance, the Brits only tax that 20%. Your statement implies the corporations get taxed everywhere for their full revenue/earnings/gains. They don't. And the way the laws are, a corporation can have its main offices in one country where all business is conducted, but be 'headquartered' in a post office box in a country where the tax rates are significantly lowered.

Wake up. Almost all corporations do this. HP does this. IBM does this. Dell does this. It's not called 'hating America,' it's called 'loopholes.' If you were beholden to shareholders and you were in charge of a corporation, you would do it too, I bet. And if not...you would never be in charge of a corporation for long.

Wake up. Almost all corporations do this. HP does this. IBM does this. Dell does this. It's not called 'hating America,' it's called 'loopholes.' If you were beholden to shareholders and you were in charge of a corporation, you would do it too, I bet. And if not...you would never be in charge of a corporation for long.

Completely agree. Apple is actually far better than most: many companies pick up and move all their people to a cheaper part of the US or worse, move all operations overseas, bringing only the best and brightest and outsourcing the rest.

California is still making billions in taxes off Apple, with 13,000 employees at Apple Campus [wikipedia.org] and all the property taxes and money the employees spend generates sales taxes. Just be glad Apple is in California at all because how many phone manufactures still keep 13,000 employees in the US? Apple sells phones, computers, tablets, and a online store, they could be in the middle of China employing 13,000 people if they wanted and we would still buy iPhones.

Apple is probably the worse possible company to choose as an example of a "tax dodge". Why don't you go after Samsung, HTC, or any of the other phone manufactures that make billions in sales in the US market but have all of their operations based overseas.

Why don't you go after Samsung, HTC, or any of the other phone manufactures that make billions in sales in the US market but have all of their operations based overseas.

Maybe because they actually manufacture all that stuff overseas? The products they sell in US, those have sales tax paid off them, which is fair. But if they don't really have any substantial design, development or production here, why should they pay taxes here (from a moral perspective, not legal - legal is a world of its own which doesn't mesh well with common sense)? Heck, Samsung doesn't even trade its stocks anywhere outside Korea.

This was rated +5, Funny, right? Oh wait... are you serious? Look, corporations don't pay income taxes of any kind. Every last penny of income tax is passed on to me and you, the customers/consumers. So in reality taxing corporations is a bizarre form of consumption tax. I think a strong case can be made for eliminating corporate income tax in general, but closing personal income tax loopholes where individuals can hide income and assets in corporations. Trying to make Apple pay their "fair share," is

I mean, I know it's the fashion to bag Apple now they're the biggest company in the world, but I thought it was common knowledge that virtually all big companies do everything they can to avoid taxes. In fact, I don't see how it's much different from pretty much every individual in the USA trying to pay as little tax as possible either. If an accountant said, "Oh hi there, I can help you avoid $3000 bucks in taxes and it's all legal" what would you say, no?

People are essentially pissed off because the more money someone (or something, in the case of companies) has, the more options they have.

Ordinary people, by-and-large, do not have the money to take advantage of loopholes designed to protect a lot of money since the upfront costs outweigh what they'd save. However, they also rarely even bother exercising the options they have in front of them to stop paying taxes almost completely (charitable donations, medical savings accounts, educational savings accounts

As a US citizen, you can not reduce your income tax by moving abroad. Furthermore, individuals generally impose fewer costs on the government as they become richer, but companies impose higher costs as they get bigger.

And just because it is legal doesn't mean it is ethical, and the point of these kinds of examples is usually not to ask an entity to voluntarily pay more, it is to talk about raising taxes on it in the future.

Yup, because Apple in no way benefits from access to the Silicon Valley job market. They could hire all those programmers in Bangalore instead, but they choose to support the Silicon Valley economy out of a sense of generosity and community spirit.

Apple has a fiduciary responsibility to avoid as much taxes as legally possible. This is more indicative that the laws are not written correctly, rather than that Apple is doing something "wrong". Of course, congresscritters might be hesitant to fix these loopholes, since a lot of their sponsors directly benefit from them. In fact, that may or may not be why they are there in the first place, but the saying "don't attribute to malice what you can attribute to incompetence" probably holds here.

Hate the game indeed. The whole system is rigged to favor the fat cats. Obama's "job czar"??? Jeff Immelt, as CEO of General Electric, has orchestrated a situation where one of the largest employers in the US and generator of billions in profits pays a pittance (if anything at all) in US corporate taxes.

Republican...Democrat....they're all for sale to the highest bidder. And people just wink at that while the media waves their hands about who Kim Kardashian is blowing this week. zzzzzzzzzz.....

Oh, please. Quit with the taxes=theft thing. Sane adults understand that we need governments and taxes. Ayn Rand/Tea Party silliness isn't based in reality. You'll understand when you grow up and interact with the world a bit more.

Nobody should quit saying it, because it's true. However, most people realize that there are overall benefits to such systematic theft. As long as it's pointed out, we may have some restraint on how much is taken because the ends should be justifiable given the means. If they are not justifiable, the means should not be employed in that area and there should be a great deal of protest if they are employed in such a manner anyway.

You think it's theft because you think that property is a natural right. Property is no more a natural right than copyright. Property is a right that exists by consent of every person who does not own it, or else by force. If by consent, then consent can be withheld. If by force, then you initiated force, and you no longer hold the moral high ground. In neither case is taxation theft.

Many disagree with that ethic. In fact, in the landmark case for tax avoidance, here's what they had to say:

"[A]nyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.

Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible.Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands: Taxes are enforced exactions, not voluntary contributions.

Oh look, another story that is actually about virtually every major company in existence but it's turned into a story by replacing "every company" with "Apple" to make it sensational and generate page views. *yawn*

One thing that makes me nervous about too much concentrated wealth is that orgs and zillionaires use it to buy political influence such that we no longer are a democracy. This is one reason why a larger portion of our GDP has been gradually shifting toward the wealthy since WW2.

If one can find a way to put a check on this, then I wouldn't be so nervous about it. The Citizen's United ruling didn't help.

Except it turns out that the number in the article is bogus. According to this article [theregister.co.uk] the reason that Apple's tax rate appears so low is because they based their quarterly estimated taxes in the U.S.2011 on their 2010 profits (as the law requires) and saw a major increase in their profits in 2011. They will pay a balancing payment in 2012 for the amount that there quarterly tax payments in 2011 fell short of meeting their tax obligation. It will be a pretty hefty payment as well, since their profits approx

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Now, you may think the law should demand more. I would disagree with you. I don't resent Apple their ability to avoid taxation, any more than I would resent a friend who managed to escape a thief or mugger with minimal damage or loss.

Apple's legal and finance departments know their stuff, and the company is fulfilling its fiduciary duty to the shareholders (like me). I don't see why the legacy media dregs at the NYT have any issue with that, but who cares what they say?

Every dollar that Apple can keep out of government's hands is a dollar that won't be spent on killing people I have no quarrel with, paying goons to grope old ladies, or harassing terminally ill patients who need pain relief.

Or building your roads. Or educating kids. Or paying people to make sure Johnson & Johnson don't leave metal shards in your tylenol. Or making sure that insurance companies pay you when they owe you money. Or employing cops to keep your neighborhood safe. Or keeping companies (such as Apple) from dumping toxic byproducts into your drinking water. Or making sure water-bottling companies sold clean water if a company DID poison your local water. Or maintaining airports and coordinating their traffic.

1) Roads. Did you read that article you posted? I encourage everyone to do so, so that they can see the pure, unadulterated crazy that right-wing think tanks like the von Mises Institute churn out. "Thousands of people die in traffic accidents, therefore we should privatize the roads." Because unregulated private industry does such a great job at promoting safety. That's why organizations like the FDA and OSHA never needed to be created.

Learn some goddamn history. Corporations were quite happy to let people die to boost their bottom lines until the government stepped in and made such behavior unprofitable.

2) Schools are just, in your own words, "starter-prisons" that "indoctrinate" the youth. Corporate controlled schools, I suppose, would be beacons of free thought. That's why ITT Tech grads are so much better than UC Berkeley grads. Oh, wait, that's backwards. American education needs work, but suggesting it would be better if it was fully privatized is stupid.

Without public funds, it's not profitable to educate most people. Far better to keep them stupid and set them to work in a factory, while only providing education to the rich kids whose parents can afford it.

3) Product safety. I swear, have you ever even seen a history book? Product safety before the government got involved was nothing short of abysmal.

I notice you didn't even address his other points:

4) Regulating insurance companies and the like. Without government courts you can take them to, they could simply refuse to pay out one claim in every ten, and there'd be no downside. If they get a bad reputation, they just change their name.

5) Cops to keep you safe. I suppose you think that should be privatized as well? I'm sure they wouldn't spend all their resources defending the homes and offices of the 1%.

6) Toxic waste being dumped in public watersupplies. Are you gonna try to deny that this one happened over and over and over again? Are you going to try to deny that without government oversight, corporations have no reason not to exploit public resources for private gain?

Privatization is the mantra of the robber barons, seeking absolute authority over every aspect of our lives. They've been winning so far, taking more and more from us and giving us nothing in return. They don't need idiots cheerleading for them from the sidelines.

It's not like Apple's the only corporation guilty of evading criminal amounts of taxes. Google never pays higher than 5%, News Corp never pays more than 2% (the same guys who use Fox News to complain about taxes being too high on the rich), General Electric paid nothing and got $3 billion in tax credits, oil companies receive stupid amounts of subsidies, Amazon still ignores most sales taxes, Microsoft always pays in the single digits as well; the list goes on and on and on. Over 2/3 of major US corporations have NO tax liabilities.

Yet these same corporations still pay MOST of the taxes they owe in other OECD countries. The difference between the US and the rest of the developed world is that we're the only country with a tax system that considers GLOBAL business activities liable to taxation (obviously there are exceptions in other countries, such as INCREASED taxes for foreign employment or pollution). Other OECD countries only tax businesses based on DOMESTIC business activities. But in order to avoid having our global taxing system cause foreign business activities from having negative net profits from piled tax rates, Congress throws in a bunch of loopholes to negate the whole thing. Only it ends up negating almost all taxes on domestic activities too. This isn't an accident.

Really? Apple is not the only company who does this to leech every single cent it possibly can without "playing fair", but besides that this is the company who's douche in chief would buy a new car every 6 months just to avoid whee taxes, or denied claim for years on his own daughter living in pretty poor conditions even going as far as saying

"sterile and infertile, and as a result thereof, did not have the physical capacity to procreate a child."

partly to not pay up, partly because he had zero responsibility to anyone but himself. You think he gave a shit about federal taxes, or what corporate culture that grew into?

Why bother changing now, nothing has been done, nothing will be done, apparently it works, and the second anyone suggest's that they pay up it gets spun into "killing American companies/jobs with the ternary of socialism"

Not doing this would be a breach of fiduciary duty. As a shareholder, I would not approve them putting themselves at a competitive disadvantage by not using tax optimization permitted by law. As a citizen, I want the loopholes closed, however, so that everyone plays by the same rules.

Here's the simple reason why corporations engage in the behavior outlined in the New York Times article: _our income tax system based on Title 26, the Internal Revenue Code, encourages such activity_.

Thanks to all those complicated loopholes in the Internal Revenue Code and all the additional rulings that add up to around 70,000 pages of tax code, this is why you have millions of jobs, thousands of factories, hundreds of corporate headquarters, and possibly as high as US$15 TRILLION (!!!) in American-owned liquid assets out of the USA for tax avoidance reasons. Maybe it's time to gut the entire tax code and start all over again in one of two ways:

1) A 17% flat-rate no-loophole income tax, where the only loophole is a very generous initial earned income (wages and pensions) exemption to protect lower-income taxpayers (e.g., as high as US$46,000 for a two-adult/two legal dependent family), and get rid of the alternate minimum tax, estate tax, maybe the FICA tax, gift tax, marriage penalty, self-employment tax and taxation on bank account interest, capital gains and stock dividend payments. This is what Steve Forbes proposed back in 1996.

2) Completely phase out the income tax in favor of a 23% national consumption tax on all new goods and services sales, where business-to-business sales, used good sales, and college tuition are exempt from the tax. To help lower-income people, any legal household will get a monthly payment to cover the cost of the tax up to the Federally-defined poverty level (US$580 per month payment for the family I mentioned earlier). This is the FairTax proposal, H.R. 25/S. 13.

Under both of these proposals, American companies have all the incentive to keep as much of their liquid assets and operations in the USA as possible, since it is tax-advantageous to do so. An it also means vastly lower yearly tax compliance costs, meaning hundreds of billions of dollars spent per year in tax compliance are now freed up for more productive activities. In short, such a change will result in the next American economic boom.

So basically, you're saying that because the natural people who live in and benefit from the taxable location pay income taxes in that location, the corporation that lives in and benefits from the taxable location should not have to pay income taxes in that location?

Call me when you decide to believe that corporations should acquire all of the responsibilities of people if they want to be recognized as people.

No, Apple sells a physical product, which limits their ability to minimize their taxes through holding companies in other jurisdictions. That is the one and only reason they pay more taxes.

Microsoft's product is all intellectual property which, even when licensed, has no physical manifestation in higher-tax jurisdictions. That means it can be held (and thus profit generated from it based) in low-tax jurisdictions. The company in the US then licenses its own technology, thus incurring a tax loss in the US.

You can tax corporations as much as you want and they will just pass the tax on to their customers. In Ohio, we have a Corporate Activity Tax that is, by law, not to be passed on to customers but some companies do it anyway (no, I can't prove it so I won't name names).

Exceptions. Tax breaks, deals, whatever you call them. For everyone who doesn't pay his share, everyone else has to pay more to get the same total.

Some economist in Switzerland - certainly not a country you could accuse of socialism - made a study years ago that we could cut both corporate and personal income tax to a flat 25% if everyone paid them in full. Right now, the highest income tax bracket in my country is 49%. But the more money you make, the les